TODAY THE FEDERAL RESERVE, America’s private central bank, began to ship billions of dollars to the central bankers of Europe in an attempt to stem the fall in the value of the euro created by Greece’s debt crisis. The total value of the deal could easily top $1 trillion according to experts. Americans — suffering from high unemployment and a tanking economy themselves — are expressing astonishment that 1) the “Fed” has the authority to unilaterally ship dollars to foreign bankers, and 2) that the desires of European-domiciled bankers come first in the Fed’s eyes over the needs of suffering, over-taxed, and unemployed Americans. (ILLUSTRATION: Federal Reserve Chairman Ben Bernanke)

According to Congressman Dennis Kucinich, Congress did not authorize the move. “The Federal Reserve is no more Federal than Federal Express,” he said, which means that, as a consortium of private banks, the Fed can decide on its own and Congress can do essentially nothing about it. Pittsburgh Examiner financial commentator Joe Schoffstall added “Their ultimate goal, just like [that of] any other bank, is to maximize their net profit to the highest levels possible. None of this would be possible without the option of printing endless amounts of money at will….”

The dollars created by the Federal Reserve — which, according to analysts, will dilute and reduce the value of every dollar in Americans’ pockets — will be swapped for rapidly-declining euros, just as the euro’s value is plummeting, and for that very reason. The Fed is acting in concert with other central banks — including the Bank of Canada, the Bank of England, the European Central Bank, the Swiss National Bank and others — in the so-called “dollar swap” effort.

The European Union and the International Monetary Fund had already pledged a $140 billion “defense package” for the euro, but it wasn’t enough. Estimates of the ultimate cost of the Fed’s dollar giveaway run from $900 billion to more than twice that amount — nearly as much or more in a single day’s pledge, critics say, as in a year of the disastrous Iraq war, which has already devastated the US economy.

The Federal Reserve’s decision today constitutes a reopening of a program started during the 2008 “global financial crisis” under which dollars are shipped overseas directly to foreign central banks. These central banks can then lend the dollars they receive to commercial banks in their home countries that they decide are “in need of dollar funding” to prevent their collapse — and make a huge profit in the bargain, courtesy ultimately of the US taxpayer.

The New York Times published information this morning which appears to buttress supporters of the deal, saying “The swap operations do not carry any exchange rate risks or credit risks… The Fed would not be a party to whatever dollar-denominated loans the European Central Bank may make to European financial institutions…. The Fed actually made money from the previous dollar swap program. The foreign central banks paid the Fed interest equivalent to what they made from lending the dollars.”

Critics say the “making money” and “no risk” claims are irrelevant, though: the dollar’s value is being diluted nevertheless and the fact that the lenders of these newly-created funds will make huge profits should be a source of outrage, not reassurance, they say.

According to American Mercury analyst Gideon Dene, “It is an outrage. But Americans have slept while the Fed has been given the power to control our entire economy. When private banks — and that is what the Federal Reserve is, the central hub of the private banking system — control your currency, you’re naturally going to see them act in their own interests instead of in the interests of American workers and small businesses. The Fed has essentially taken over one of the functions — you might say the most important function — of government: control of the currency. And so you get government by the bankers, of the bankers, and for the bankers.”

“And remember,” Dene added, “European-domiciled banks aren’t necessarily ‘European’ in any real sense. Look at the stockholders and you’ll find out that many of these characters are no more European than George Soros or the Rothschilds. These are internationalist, globalist ‘operators’ with no loyalty to any country. It’s both insane and tragic that we’ve handed over our currency to these private bankers. It’s like hiring Al Capone to run your Neighborhood Watch program.”

I asked Dene what could be done: “The problem actually goes deeper than the Fed,” he said. “The ‘Audit the Fed’ folks, if they get their way, will just uncover the tiny tip of a mountainous problem that’s been buried in ignorance and obfuscation. And that problem is fractional reserve banking. That’s the system that essentially is our financial system today. Most money is not created by the government. Most money is not created by the Fed either — most money is created by commercial banks through the ‘magic’ of the fractional reserve system, acting on demand deposits — like checking accounts. The Fed supervises and hopes things don’t get out of hand — and steps in when they do.

“The fractional reserve principle is based on the idea that most depositors won’t ask for their money all at once. So you can lend out 90 per cent. of your depositors’ funds without deducting the amount you lend from their accounts — in essence creating money.

“That’s a system that guarantees panics, failures and bubbles. And until people understand that, there will be no push for meaningful reform. Not one citizen in ten thousand has even heard of fractional reserve banking. And not one journalist in a thousand understands it. And those who are getting rich off of it are going to do everything they can to maintain that general ignorance. I do hope that what the Fed did today has an educational effect.”